Agur, Itai; Demertzis, Maria - de Nederlandsche Bank - 2010
burden of the banking sector is modest. We model a regulator whose trade-off between bank risk and credit supply is derived … has through bank incentives. The larger the correlation between banks' projects, the more important the role for monetary … policy. In a dynamic setting, not internalizing bank risk leads a monetary authority to keep rates low for too long after a …